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Monetary Economics Lecture 9
Monetary Economics Lecture 9
2) Currency boards.
A currency board is a monetary authority that
issues notes and coins convertible into a
foreign anchor currency (also called the
reserve currency) at a truly fixed rate and on
demand.
A currency board can operate in place of a
central bank or as a parallel issuer alongside
an existing central bank; cases of parallel
issue have been quite rare, though.
Argentina worked well from 1991 to 2000,
then fell apart.
Others are Hong Kong, Lithuania, Estonia,
Bulgaria. Earlier, many British colonies.
I Monetary systems around the
world
Often
distinctions between legal
exchange rate and effective (black-
market) one.
II Optimal Currency Areas
Recent trends
1) An increase in the number of small countries
In 1947, 76 independent nations in the world.
l In 2002, 193.